I somehow missed this Trump policy gem…
- Thread starter mnole03
- Start date
Senator Bernie Sanders, progressive independent from Vermont, said he will "absolutely" be willing to work with President-elect Donald Trump, especially if the Republican "follows through" with a proposed credit card interest rate limit.
Sanders joined The New York Times' Michael Barbaro on "The Daily" podcast Friday. Barbaro asked Sanders if there are "any areas where you are prepared to work with the President-elect." Trump had suggested during his campaigning in September that he would put a cap on credit card interest rates at 10 percent.
"If Trump, for example, follows through on his proposal to limit interest rates on credit cards to 10 percent, which is what he campaigned on, absolutely I will be there," Sanders said.
"I think it's a very good idea. I think it's time we told the people on Wall Street they cannot charge the desperate working-class people who have a hard time paying their bills' 25, 30, 40 percent interest rates."
https://berniesanders.com/issues/fair-banking-for-all/
- Cap consumer loans and credit cards rates at 15 percent across all financial institutions and allow states to go even further.
- Allow every post office to offer basic and affordable banking services and end lending discrimination.
I have to be honest, if Trump actually managed to cap everyone's CC interest at 10 percent, I might upgrade my estimation of him from being WOAT POTUS to only being like the 10 worst POTUS. That would be a huge help for millions of people.
Unfortunately, this sounds like another case of Trump overpromising and (most likely) underdelivering.
Unfortunately, this sounds like another case of Trump overpromising and (most likely) underdelivering.
Naturally, Sanders and Ocasio-Cortez are framing the bill as something designed to help “ordinary people.” But in reality, the legislation will only act as to reduce access to credit for low-income and other high-risk borrowers.
Credit card companies don’t attach high interest rates to credit cards because they are mean and cruel. Credit cards with especially high interest are that way because the borrowers have been determined to be an especially high credit risk. Credit card companies want people to borrow money from them, so if they can make loans at lower rates, they will, in order to undercut the competition. But these companies also must make sure they’re likely to cover their costs. Thus, the high interest rate exists to ensure the lender can make consumer loans while still accounting for the high risk of default by borrowers based on a risk profile.
Given that interest rates are similar to a “price of money,” if Sanders and Ocasio-Cortez manage to slap a new limit on credit card interest rates, they will be essentially imposing a price ceiling on credit cards.
And price ceilings are sure to lead to shortages.
That is, they’ll lead to shortages in consumer credit for high risk borrowers — many of whom will be low-income borrowers.
If lenders cannot price their product in a way that allows them to recover costs, they’ll simply stop providing that service. Rather than face lower interest rates on credit cards — as Sanders and Ocasio-Cortez imagine will happen — high-risk borrowers are more likely to not be able to borrow using credit cards at all. Given that default rates are generally higher for low-income borrowers, the cost of collecting payments is higher. Lending to high-risk groups then is only possible if the price of those loans is higher. Without the higher price, the service will go away.
In his essay on payday lending — an issue very similar to that of high-interest credit cards — Tom Lehman analyzes the accuracy of these sorts of claims:
As is so typical of politicians, the answer offered by this new legislation is to limit the options available to the most at-risk populations.
A better approach is to allow freedom for both borrowers and lenders, to treat borrowers like adults, and to not assume they are incapable of managing their own money. (mises.org)
I think this is something that should had been done a long time ago. They should also regulate/reduce the CC fees to vendors. Europe has, and their rates are half what they are in the States.
Limiting credit access for high risk borrowers is more responsible than allowing them to borrow up to their eyeballs at 24 percent.
The Reagan tax reforms “phased out” credit card deductions over a period of years..starting with the Reagan Tax Reform bill starting in about 1984. I got divorced during those years ( rather contentious as I remember it) and a couple of years after it was “final” I filed an amended return where I included some loan interest that was hidden ( misplaced was her attorney’s word) and I was able to pocket the entire IRS refunded amount…it was a couple of hundred dollars but it was the principle that mattered for me.
Pretty sure he also changed child care from a tax credit to a tax deduction too.
MAGAs.... - weird definitely - but they are amusing. These are people who are routinely fired up about Marxism, communism, socialism, Venezuela. Terrible labels in MAGAland.
And when their guy is being made fun of their response is to show that he shares ideas with known socialists like Bernie Sanders and AOC?
So your guy is an anti-free market socialist?
Uhh, good job!
And when their guy is being made fun of their response is to show that he shares ideas with known socialists like Bernie Sanders and AOC?
So your guy is an anti-free market socialist?
Uhh, good job!
Anyone with non-prime credit buying a used car.
Don't forget that he also taxed unemployment "income."
If we don't tax that, these "Takers" will stay on the unemployment income rolls for the rest of their lives.
Well, in fairness, if he hadn't, he probably would have tripled the national debt.
Oh, wait...
HELOC rates are between 8-10% and that’s on a loan secured against property.
There is no market for unsecured debt at 10%. We aren’t talking about lower income people here, that market will be basically gone.
Most of Trump's supporters don't know what Marxism, communism and socialism mean. They have been told it's bad, so they believe it.
They love the military! Whose salaries, housing, education, healthcare, all provided by the government, funded by taxes and government issued debt.
Recently I purchased some furniture and I had an option on 0.0% interest and pay over a year. The furniture store's finance through a bank who issued me a line of credit and if i don't pay on time the APR is 34.99%. Yes, 34.99%. I immediately set up autopayment in full each month.
I wonder how often they get to charge that.
I wonder how often they get to charge that.
One has to ALWAYS read the “small print”…especially with furniture/appliance purchases…be forewarned! Often, the “per month” amount the contract owner quotes the buyer does not pay off the contract in the ZERO RATE time period, exposing the narrower to extremely high interest penalties and rates! (“NFM” is the particular company I am familiar with in this type of manner.)
